Quote:
Originally Posted by Molten
I have a feeling your team does funds quite different then 1766. For instance, we empty our account every year to avoid tax problems. [...]
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WHOA, there! There is absolutely
NO reason to "empty your account every year"! In fact, that's a *horrible* idea! You can't build up any working capital, nor build up reserves in case something happens to your primary sponsor!!!
FYI, (at least in the US) public schools are inherently non-profit because they are technically "governmental agencies", and therefore non-taxable. You MAY keep surplus funds in the account at year's end, and it is not taxable. Talk to your school's accountant. (And if they disagree, your school better find a REAL accountant, that knows the law!)
Even IF you've made your team a 501c3 (non-profit corp), that too does NOT require you to "flush your account" each year. Non-profits need working cash too! Think about it. A non-profit dumping their reserve annually would have ZERO cash to pay their workers (yes, non-profits CAN have paid workers) until the new year's donations arrived! That would crash them!
The one thing you can't do with a non-profit is DISTRIBUTE PROFITS. The mere fact you have cash left over does NOT in and of itself "constitute a profit". As long as the money still sits in the account and does not go out to the "shareholders" in the form of a distribution, you're fine. Talk to any licensed accountant to get the full lowdown on this, and how to account for your surplus correctly.
IMHO, EVERY team should be striving (over a few years) to build up a "reserve", of at LEAST: one "kit fee", plus robot build costs. That keeps the loss of a primary sponsor from becoming the death of the team. Personally, I suggest budgeting a "surplus goal" of at
least $1K-$2K per year. (IOW, don't stop fund raising until you have at least that much MORE cash than you intend to spend this year!) This allows you to build up a decent "safety net" in just a couple of years, and a "one season death defying reserve" in about 4 years.
Then, if a sponsor loss happens, until such time as you can find new sponsors you simply "borrow against your reserve" to continue for that season, and work to fund raise
to replace it by the school year's end.
In fact, one of our county's teams has been doing that for the past
three years, which was when the local factory that supported them closed down. Yes, it's painful (and stressful), but they're still here, BECAUSE they planned ahead and had that cash reserve!
Go find a REAL accountant, and discuss this with them. The feeling that a team "needs to be broke at year's end" is one of the biggest financial misconceptions I run into with teams. If left uncorrected it can EASILY cause a team to crash and burn at the first trivial cash problem they encounter. You NEED a cash reserve.
Does this make sense?
Quote:
Originally Posted by Molten
Remember, "where there's a will, there's a way."
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...Personally, I prefer: "Where there's a will, there are always a bunch o' greedy relatives hanging around..."
- Keith